Alden Global Capital, a U.S. hedge fund known for taking over struggling U.S. newspapers, has unveiled an offer to acquire and privatize the owner of the Chicago Tribune, valuing the publishing company at around $ 520 million.
The hedge fund, which already owns around 32% of Tribune Edition, offered to buy the newspaper group for $ 14.25 a share, an 11 percent premium over the publisher’s closing share price on Wednesday.
Alden has helped lead the consolidation of the local and regional newspaper industry in recent years, drastically cutting the costs of its titles to boost profitability and creating controversy along the way.
Employees of its publications have called the company “vulture capitalists.” Political leaders, such as Senator Chuck Schumer of New York, argued that the hedge fund’s management of local newspapers was having a negative impact on American democracy.
If the acquisition is approved, the comes out of local american news business would fall more into the hands of financial groups, after cycles of consolidation over the past decade. The newspaper industry has shrunk for years as online media thrived and frothy print advertising revenue dried up, leaving local newspapers as targets for hedge funds and private equity.
Through MNG Enterprises, which is a private company controlled by Alden, the hedge fund has amassed a portfolio of more than 200 newspapers, including The Denver Post and The Orange County Register in Southern California.
“We believe that as a private company, Tribune would be able to unlock significant strategic and financial value,” Randall Smith, founder of Alden and former banker at Bear Stearns, said in a regulatory brief released Thursday.
In the depositAlden said the deal is subject to approval by a committee of independent directors and two-thirds of Tribune shareholders who are not associated with Alden. Besides Alden, the company’s second largest shareholder is Patrick Soon-Shiong, the pharmaceutical billionaire who bought the Los Angeles Times and owns around 24% of Tribune’s shares.
In 2019, Alden made a hostile takeover bid to acquire Gannett, owner of USA Today, for approximately $ 1.4 billion. After rejecting Alden’s offers for months, Gannett agreed to be sold to GateHouse Media, another rival newspaper owner.
Since failing to acquire Gannett, the hedge fund has attempted to take control of Tribune, which also controls the New York Daily News and the Baltimore Sun. In July, Tribune agreed to give Alden three out of seven seats on the board as part of a truce to prevent the hedge fund from increasing its stake or launching a hostile takeover before June 2021.
Alden, who is advised on the transaction by boutique investment bank Moelis & Co and law firm Akin Gump Strauss Hauer & Feld, said on Thursday he hoped to reach a final deal with Tribune by two to three weeks.
Tribune could not be reached for comment.